Automatic Tax Filing to Benefit Low-Income Canadians

In the recently released Budget 2023, the federal government of Canada announced its plan to automate tax filing services for millions of low-income earners. The announcement aims to help these Canadians gain access to valuable benefits and support, such as the Canada Child Benefit and the Guaranteed Income Supplement, which they are entitled to but are currently missing out on.

Currently, up to 12% of Canadians, the majority of whom are low-income, do not file their tax returns, and this announcement is a significant step towards addressing this issue. The Canada Revenue Agency (CRA) had already introduced the File My Return service in 2018, which allows eligible Canadians to auto-file their tax return over the phone after answering a series of short questions. In the 2022 tax filing season, approximately 53,000 returns were filed using this service.

With the latest announcement, the government aims to increase the number of eligible Canadians for File My Return to two million by 2025, almost triple the current number. The government plans to report on its progress in 2024.

The Budget 2023 also introduced the pilot program for a new automatic filing service to help vulnerable Canadians who currently do not file their taxes and provide them with the benefits they are entitled to. The CRA will present a plan in 2024 to expand this service further following consultations with stakeholders and community organizations.

It is estimated that non-filers missed out on more than $1.7 billion worth of government rebates and programs they were entitled to in the 2015 tax year alone. The automated system will also free up the time and resources of agencies like Prosper Canada, which work with low-income Canadians, to help them with other issues as tax planning is often a gateway to other financial health services.

Although Canada’s tax system places the onus for filing on citizens, this is not the case in other countries, including Slovenia, Norway, Denmark, Finland, Chile, Portugal, New Zealand, and Australia, where filing taxes is automated. In those countries, the government fills out information on behalf of filers with what they know of their income and deductions, and then asks them about any other pertinent information that might reduce their tax burden. In some cases, the process takes minutes.


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